Week One Assignment

Running Head : Illustration of Circular Flow Diagram

Illustration of Circular Flow Diagram

Illustration of Circular flow diagram

Circular flow shows the way in which a market economy works . In market economy consumers are mainly influenced with is produced . Consumers spend in order to satisfy the wants . This in return encourages the supplier to produce more commodities and an individual is consuming

The circular flow includes the business sector and households sector Households include both people spending money are also the receiver of the money . Trade segment have the same work too

they pay out cash in the marketplace and take delivery of cash as of the household which they spend in order to consume the goods

The resource market this is where the business sector purchases what they call raw material in order to produce finished good .The resources used in this is manual labor , raw materials , capital and entrepreneurship is given by households . Lets take an example For instance a business want to build shopping center the resources have to be include territory on which structure is to be constructed ,Capital to complete the building which comes from the households , Labor who is going to work on the resources provided by the business sector in order to construct and etc

The other kind of market is where goods and services produced or manufactured by the business sector are sold and is generally called Product Market . In this the household by spending consume the goods from the market for their...